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Allegiant, Meet National City

The St. Louis bank is the apple of National City's eye.

Shares of St. Louis-based Allegiant Bancorp(NASDAQ:ALLE) was one of the hottest stocks on the market today following the announcement that National City(NYSE:NCC) plans to buy the company. The deal values Allegiant at $27.25 per share in cash -- a nice premium for shareholders over yesterday's closing price of $23.40.

Last month, Brian Hook took a brief look at Allegiant -- what he considered a growing Midwestern bank with a nice dividend. Allegiant is the largest publicly held bank based in St. Louis, and the acquisition marks National City's entrance into that market. Likely a good sign is news that Allegiant CEO Shaun Hayes will stay on board -- this recalls Berkshire Hathaway(NYSE:BRK.A), which considers the management of the companies it acquires a key asset.

Allegiant itself has much to recommend: growth, a growing dividend, and a key position in a regional market. Banking mergers aren't always well received, but they usually are when it comes to smaller institutions -- particularly as these deals tend to be funded with cash and carry rich premiums.

There's a lot to like about regional banks. Fool Mathew Emmert examined their appeal in a Septemberseries discussing Burke & Herbert (OTC: BHRB), Bank of Granite(NASDAQ:GRAN), Synovus Financial(NYSE:SNV), and Frontier Financial(NASDAQ:FTBK). Bill Mann, meanwhile, examined the wonderfully named Crazy Woman Creek Bancorp (OTC: CRZY) just last month. A few of the things regional banks have going for them are generally conservative lending practices, strong local ties, and less likelihood of potentially destructive mega-mergers. In contrast, Wachovia(NYSE:WB) is only starting to recover from its ultra-acquisitive ways.